The past trading week was defined by a surging US dollar, which solidified its foothold at multi-month highs on the back of strong inflation reports and increasingly hawkish Federal Reserve rhetoric. Against this backdrop, European currencies and commodities came under heavy pressure, while geopolitical factors and crude oil inventory dynamics sent mixed signals across the energy market.
United States: Inflation Beats Forecasts, Dollar on Top Inflation pressure and the Fed: Consumer Price Index (CPI) data released on Tuesday beat forecasts, pushing the monthly reading up to 0.4%, while annual inflation and the Producer Price Index (PPI) reinforced expectations of a prolonged tight monetary policy. Several Fed officials left the door open for a more aggressive rate move in December, helping the DXY index hold firmly near 19-month highs. Labor market and housing sector: Weekly statistics showed steady initial jobless claims (194 000), while the existing-home market cooled amid elevated interest rates.
Eurozone & Germany: Cooling Prices and GDP Dynamics Inflation in Germany: Preliminary October data showed a notable slowdown in Germany's consumer price growth (to 2.8% year-over-year), easing tensions ahead of the upcoming European Central Bank meeting. Eurozone GDP: The third quarter closed with regional economic growth at 0.4% q/q and 1.3% y/y, confirming moderate resilience among European businesses amid ongoing debates over the ECB's next policy steps and remarks from Christine Lagarde.
United Kingdom, Japan & Commodity Factors
United Kingdom: Preliminary third-quarter GDP estimates recorded a quarterly expansion of 0.7%, lending support to the pound despite broader pressure from a strong greenback. Japan: A contraction in household spending (which plunged 2.8% m/m) kept the yen under pressure near the critical 160 level against the dollar, prompting the Ministry of Finance and the Bank of Japan to issue verbal warnings over potential intervention risks.
FX US Dollar Index (DXY): Firmly held its ground above the 103 mark amid expectations that the US rate-hiking cycle will continue.
EUR/USD and GBP/USD: Remained under pronounced selling pressure, hovering near multi-month lows against the backdrop of greenback strength. USD/JPY: Traded near the psychological 160.00 barrier, reflecting persistent monetary policy divergence.
Commodities Crude Oil (Brent / WTI):
Showed mixed dynamics. On one hand, geopolitical statements surrounding the Middle East lent support to prices; on the other, an unexpected build in US commercial crude inventories reported by the EIA fueled oversupply concerns.
Gold and silver (XAU/USD, XAG/USD): Precious metals pulled back from recent peaks under pressure from rising Treasury yields and a strong dollar, pricing in hawkish signals from the Fed.
Bitcoin: Corrected below the psychological $70 000 threshold amid rising US Treasury yields and institutional capital outflows from spot ETFs.
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